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December 2, 1994

Mr. Phill Gross, IESG Chairman
Director of Broadband Engineering
MCI Data Services Division
2100 Reston Parkway, Room 6001
Reston, VA  22091

     Re:  IBM Proposal to Internet
          "Modular Approach to Key Management"

Dear Mr. Gross:

IBM has been working with others to make the Internet a more
secure vehicle on which users can transmit messages without fear
of having those messages intercepted and read by unauthorized
parties.  The enhancement of message security on the Internet is
important to IBM and to other members of the Internet community.
IBM has proposed a method which it believes, if adopted by the
Internet Engineering Task Force (IETF) and implemented by the
Internet community, will significantly improve the security of
message traffic on the Internet between authorized users.

In keeping with its view of the importance of such security, IBM
is willing to make an exception to its long-standing and
preferred practice of supporting industry standards by making
available nonexclusive licenses under its patents, on reasonable
and nondiscriminatory terms and conditions, including its then-
current royalty rates.  In this case, IBM will grant, to Internet
users and to companies that will provide equipment for use by
such users, a royalty-free right to practice inventions covered
by claims of IBM patents where such claims are infringed as a
necessary consequence of implementing the modular key management
system of the Internet Protocol (IP), as specified in the IBM
proposal.  Such grants will be made if the IBM proposal is
included in the final Internet standard and only to requesting
parties who commit to grant IBM rights of similar scope under
their patents that relate to the Internet standard in question.

At this time, IBM believes that the only IBM patent relevant to
the proposal is US Patent #5,148,479 and its non-US counterpart
patents and patent applications.  The agreement between IBM and
each licensee will specifically reference, but will not be
limited to, this patent.

This letter will be posted on the Internet within the next few
days.  IBM is working on the language for the agreement and will
forward it to members of the IETF when advised by the IETF that
acceptance of the IBM proposal is contingent only upon the terms
and conditions of the IBM agreement.  Any IETF member that wishes
to review the draft before that time may send a written request
to me for the draft, at the address recited below.

IBM will also post the agreement on the Internet and will receive
acceptances of the offer and requests for the agreement
electronically.  However, as questions remain about the
enforceability of agreements "executed" electronically, IBM will
require the execution of a confirmatory printed copy of the
agreement by each licensee and IBM.  This should eliminate any
question regarding enforceability of such agreements.

IBM has not determined whether the IBM proposal is clear of
infringement of any third party patents and will not undertake to
clear or provide indemnification for products or services of
others if its proposal is adopted.

Any questions about this offer or requests for the confirmatory
license may be directed to:

               John W. Lowe
               Program Manager, Licensing
               International Business Machines Corporation
               500 Columbus Avenue
               Thornwood, NY  10594
               United States of America

               Internet ID: JWLOWE@VNET.IBM.COM
               Telephone: (914) 742-6275
               Fax: (914) 742-6729

IBM is pleased to make this offer in support of its proposal to
Internet.

Sincerely,



John W. Lowe
Program Manager, Licensing
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